U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20953A / March 13, 2009
SEC v. Michael Biello, Civil Action No. 4:09-CV-00752, United States District Court for the Southern District of Texas (Houston Division)
SEC Files Settled Insider Trading Action Against a Former ACR Group, Inc. Employee
On March 13, 2009, the Securities and Exchange Commission filed an insider trading action against Michael Biello in the United States District Court for the Southern District of Texas, Houston Division. The Commission alleges that Biello, formerly employed by an ACR Group, Inc. affiliate, unlawfully traded in ACR Group's securities when he tipped his brother in advance of the July 5, 2007 public announcement that Watsco, Inc., a New York Stock Exchange issuer, would acquire ACR Group's outstanding common stock in a tender offer.
The Commission's complaint alleges that, in June 2007, while employed by the ACR Group affiliate, Biello learned that Watsco had offered to buy ACR Group. According to the complaint, Biello then advised his brother to purchase ACR Group's stock, telling him, among other things, that ACR Group was a likely merger candidate. His brother promptly purchased 3,300 shares of ACR Group stock. Before market open on July 5, 2007, ACR Group announced Watsco's tender offer, which led to an approximate 44% increase in ACR Group's stock price that day. Biello's brother sold his ACR Group shares on July 5, earning $6,036 profit.
Without admitting or denying the allegations in the complaint, Biello has agreed to settle the Commission's charges by consenting to a permanent injunction against further violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934, and Rules 10b-5 and 14e-3 thereunder, and to pay disgorgement of $6,036 plus prejudgment interest of $596.34, and a civil penalty of $6,036.
The Commission wishes to thank the Financial Industry Regulatory Authority (FINRA) for its assistance in this matter.